I’m always surprised when financial pundits in the United States forget to mention that, although domestic markets may be closed for a holiday like today’s Labor Day commemoration, foreign markets are open and generally thriving.
Across the globe, brokers are still pushing and pulling the markets — they’re just doing it in Buenos Aires, Japan and London.
Because I feel blessed to live in the greatest nation in the world, I know it’s easy to get stuck in an insular view that America is the only land of opportunity, but it’s a big world. The sooner we get acclimated to that idea, the sooner we can benefit from it.
DO YOUR PORTFOLIO A WORLD OF GOOD WITH OPTIONS
While I don’t necessarily advocate investing directly on foreign exchanges unless you are competent with currency conversion and have the constitution to trade at all hours of the night, there are plenty of opportunities in domestic markets that allow us as options traders to take advantage of booming economies and bright sectors abroad.
In my Tactical Trader options trading service, I’ve been helping my members to capitalize on global infrastructure companies, as well as those that support corporate globalization efforts.
The simple truth is, companies that are thriving worldwide are much-less likely to be affected, let alone traumatized, by less-than-opportune domestic economic conditions.
In addition to looking for “worldly” profits, I’ve been instituting a particular strategy that’s allowed me to more significantly reap the rewards. I like to call it “basket trading.” It’s a simple idea, but aren’t those usually the best ones?
A CASE FOR BASKETS
Simply put, for each basket, I identify four to nine trading names that will either benefit or suffer from a broader-market shift.
Because you’re in charge of your investing destiny, you can tailor your trading baskets to help you make the most money. I’ve crafted baskets of all call options, all put options or a careful balance of the two to profit from some stocks’ ascent piggybacking on other stocks’ decline.
For example, when crude oil prices are on the rise, it’s a great time to look at other energy-related names that might be benefiting. And when oil prices pull back and consumers’ discretionary spending goes up, you can look for the stores and restaurants that might be the recipient of the “extra” money in customers’ wallets.
Better yet, you don’t have to wait for earnings season or any other specific events to create a trading basket — unlike basketball season, it’s always basket trading season!
TURN UP THE PROFITS WHEN A SECTOR TURNS DOWN
In May, I recommended a “Sell in May and Go Away” basket, to benefit from the seasonal shift in capital. Of the nine positions, seven finished in positive territory with gains of as much as 104% in just two days.
We followed that with an even more successful basket of energy shorting plays with put options in the SPDR Energy ETF (XLE), Transocean (RIG), Murphy Oil (MUR), Hess Corp. (HES) and Occidental Petroleum (OXY).
More than a few people thought I was a bit “out there” with shorting energy names before the summer driving season was set to begin in earnest, but the five trades all closed with gains and yielded an average 27% return in less than a week. I believe we’d be hard pressed to find someone whose long por! tfolio h as given 27% all year.
We really built up steam, if you’ll pardon the pun, in our basket of coal trades this summer. I recommended four coal mining names, and in just four days, we closed the basket for an average 65% win.
BOMBS SET TO PRODUCE TRADING FIREWORKS
My latest basket, which I called the “Bombs Over Iran” basket, has been on the board for about a week and is based on Israel’s impending attack on Iran’s nuclear facilities.
The idea behind this Iran basket is that, if Iran doesn’t shut down its nuclear weapons development ambitions, Israel is going to bring an entire world of hurt on the sites with help from Israeli F15 and F16 fighters.
Lt. Gen. Thomas G. McInerney (U.S. Air Force, ret.), former assistant vice chief of staff of the Air Force said about the imminent strikes, “To hit the number of targets the Israelis need to hit with their force structure would require several days. If they did it in a night — with, say, 100 airplanes — they’d probably inflict significant damage to Bushehr and other facilities, but it would be more difficult to hit the deep bunkers at Natanz.”
Natanz is deemed as the facility where advanced weapons-grade nuclear material is being developed.
In short, any campaign to neutralize Iran’s nuclear facilities will take about a week to complete and won’t just include nuclear targets, but regime targets, as well. This is where it could get messy.
Calls for Iran to discontinue its nuclear efforts have fallen on deaf ears and I believe a certain timeline for attack is now in play. In the wake of the Georgia and Russia conflict, it’s just one more reason that I’m grateful for living in America.
I’m only able to give the specific t! rades to Tactical Trader subscribers, but in less than a week, one of the four names — a major defense player — is up more than 47%. Not too shabby for one of the lowest-volume weeks the market has seen all year.
The other components of the basket — an oil play, a gold play and an airline, which we’re playing with both call and put options — are all poised to follow suit.
FOLLOW THE MONEY, WHEREVER IT LEADS!
I’m a firm believer in sector rotation, both on Wall Street and in your portfolio, to move in and out of the spaces where profit flourishes. And, in the same sense, I think we can “region-rotate.” I follow the money wherever it leads us, be it Baghdad, Bangladesh or Beijing.
But here at home, while millions of Americans are enjoying a day of rest, home improvement projects or shopping, let’s not forget than an equal number of Americans are staffing the shopping malls, movie theaters, amusement parks and restaurants to facilitate those activities (though, admittedly, our ChangeWave Alliance surveys have been reporting that consumer spending figures will be much lower this year in many of these areas).
Labor Day celebrates both sides of the coin: hard work and leisure. Both are part of the American dream and, from where I stand, that dream still shines bright thanks to tactical options investment strategies that allow us to profit from all sorts of opportunities and to enjoy the rewards that savvy investing can bring.
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